Your frequently asked questions about the benefits of an IVA answered here in detail.
You may have read about the advantages and disadvantages of an IVA, now we’ve answered your IVA queries in more detail – does an IVA guarantee to write off some of your debts? Will interest and charges definitely be frozen? What happens at the end of the agreement? Read on to find out the answer to all of these questions.
Does an IVA guarantee to write off up to 70% of my debts?
This depends entirely on our assessment of your ability to repay. More typically we cut people’s debts in half (if they complete the IVA). We do achieve a 70% write-off (or better) in around one in five cases. You must keep to the terms of the arrangement and all your debts must be included in the proposal. Unlike debt management plans, an IVA is a once and for all settlement of your debts (excluding mortgages and secured loans).
The IVA application involves our team working out with you exactly what you can afford to contribute in one monthly payment to us, after your essential expenditure has been taken into account. We then distribute this payment to your creditors.
It’s vital you include all your debts in the proposal. Any excluded creditors could challenge the validity of the arrangement if they believe that there has been unfair prejudice. However if you have inadvertently missed a creditor off your list, that creditor will still be bound by the IVA (unless they were owed 25% or more and wanted to vote against your proposal).
Once the arrangement is successfully finished, your debts are written off permanently.
Does an IVA guarantee freedom of debt in five years?
This would depend on the duration of your proposed IVA, most commonly IVAs do last 5 years but we cannot guarantee this (if you have missed payments), or are not able to remortgage and therefore offer up to 12 payments in lieu of equity.
Changes to the timings of your completion date can sometimes come into effect if you are unable to make your monthly contributions for a while due to a change in personal circumstance. It’s important to note that although you will be debt free at the end of the your IVA, your credit rating could be affected for another year.
My debts are so high that with the interest on top, it's getting out of control - does an IVA guarantee to freeze all interest on my debt?
Yes. One of the key advantages of an IVA is that it binds your creditors, legally, to freeze all future interest on your debt. This means your debt level will not increase more than the amount you start your IVA on. The only exception to this rule would be if you are unable to make or keep up with your contribution. If this does happen, through no fault of your own, we are often able to agree a possible variation with your creditors.
Can I obtain an IVA if a bankruptcy order has been made against me or if any of my creditors are taking court action against me?
Yes, as long as you have not been discharged from bankruptcy. It is possible to annul a bankruptcy and enter into an IVA if it is more appropriate.
Also once the IVA is in place, you are protected from further recovery action by the creditors scheduled in the IVA and court action will be dropped.
Can I enter into an IVA if I have already received a Statutory Demand?
Yes, although we recommend that you contact us as soon as possible. We would apply to the Court for an “Interim Order”, which is a request to suspend all legal action until the result of the creditors meeting is known.
If I enter into an IVA does that mean that I won't have to go bankrupt?
It does, however, should you miss payments this will have to be reported to your creditors and they will then decide what action to take.
This will affect your ability to get credit once the IVA is completed.
What happens at the end of the agreement?
As long as the terms of the proposals have been fully carried out, your creditors will have no further claim against you and the balance of any unpaid debts is written off. You will be provided with documentation to confirm that you have satisfactorily completed the IVA and a report will be sent to your creditors.
Will you help me deal with my creditors if I'm in an IVA - they keep calling me and writing letters - I'm feeling very harassed and helpless to do anything about it?
Yes – absolutely. We understand how stressful dealing with creditors can be if you are in debt to them. We will help handle any creditor relations we can on your behalf to help relieve any pressures for you.
We can also reassure you that once the IVA is in place creditors and debt collectors can’t legally pursue other routes to debt repayment from you. Read more in our FAQ about IVAs and Creditors.